Spotify to offer free, ad-supported mobile service?

Swedish music streaming company Spotify could be about to announce a free advertising-supported service for mobile devices in the US and other countries.

Speculation has been rife after the company announced that it is to make a big announcement this Wednesday (December 11) at its New York office.

According to The Wall Street Journal, Spotify has already signed deals with Sony, Universal, and Warner for the new service. Negotiations with the three majors took at least a year. The sticking points were royalty rates and how much control users will have in choosing the free tracks they are offered.

This would be part of Spotify’s plans to launch in new countries, especially those with developing economies. It plans to build up its free subscriber base from 24 million (6 million paying subscribers) to 40 million. It currently operates in 32 countries.

The new service would take on the impending global roll-out of Apple Inc.’s iTunes Radio (which offers free ad-supported streaming on mobiles and desktops), as well as Pandora (which also offers free streaming for mobiles) and, from next year, Google Inc.’s YouTube and Beats Electronics LLC.

Reports say that the new service will allow listeners to select 15 tracks for limited play on a customised playlist. These will play randomly with some ads in between. If the user chooses less than 15 tracks, Spotify will fill in the gap with its own song choices. The free mobile service will require a constant Internet connection. Spotify’s paying subscribers can store songs on devices for offline listening and aren’t interrupted by ads.

Currently, a free version of Spotify’s music streaming service is available only on desktop. On mobile, Spotify’s service requires a premium subscription ($10 a month in America) if the user wants to choose the tracks.

The idea is that users enticed to the service through a free offer can be persuaded to later upgrade to a premium offering.